Penn National Gaming, the operator of the M Resort and the Tropicana, announced on March 27 that they would furlough 26,000 employees in a nationwide action as a response to the effects of the Covid-19 pandemic.
The company issued a statement announcing the furloughs, as well as their intention to sell the real estate assets of the Tropicana and a lease for planned casino in Morgantown, PA. This lease was going to be for real estate investment trust Gaming and Leisure Properties Inc (GLPI) and could earn the company a total of $337.5 million in rent credits.
In the statement, President and CEO Jay Snowden stated, “As the global COVID-19 health crisis continues to evolve, we are navigating through this unprecedented time for our company, our industry, and our nation.”
The statement further went on to explain the actions regarding the leasing of the property in Pennsylvania. He explained the financial terms of the lease and added that “the deal includes an option for us to acquire the operations of GLPI’s Hollywood Casino in Perryville, Maryland at a future date. We greatly appreciate the cooperation, creativity, and partnership shown by GLPI during this challenging time. While this transaction will help to relieve liquidity pressure in terms of rent obligations, we are committed to taking further steps to reduce our ongoing operating expenses in order to ensure we have a healthy business to return to when we are able to re-open our doors.”
While touting the move to earn the company additional revenue during this difficult period, the CEO acknowledged that the need to furlough employees was a tough decision. “This decision was extremely difficult to make for all of us at Penn. Penn National is a family, and we deeply regret the hardship this will place on you and your loved ones.”
He added that “We are extremely motivated and focused on re-opening our properties as soon as it is safe and legal to do so.” Those who are furloughed will receive medical benefits for themselves and their families according to the health plan through June 30.
Penn National joins a growing list of casino operators forced to furlough employees. After casinos in South Dakota closed last week, the number of commercial casinos that have shut their doors climbed to 465, according to the American Gaming Association (AGA). The AGA also stated that 76% of all tribal casinos are closed. That has put more than 616,000 employees out of work, and that number is expected to increase by 40,000.
To assist with the fight against the pandemic, Penn National established a special COVID-19 Emergency Relief Fund, which has already raised over $1.2 million. “We are committed to doing all we can to help our affected team members get through this,” explained Snowden in the statement.
